TEL made an impressive run from late 2002 until late 2007. After which, as we all know, everything started to melt. For 5 years, TEL did not correct until the start of 2008. Looking at the long term chart, TEL is still in an uptrend.

Let us first take a look at the bear side of TEL. In fig. 1a, TEL retraced to the 50% fib at 2795, suggesting a downside target (see fig. 1b) between 127% and 161.8%. As expected, TEL found support between those levels. If this stock goes below 1810, the downside price target of 1610 is highly probable.

fig. 1a, 50% retracement

fig 1b, 127% and 161.8% support

And now we look at TEL from a bull’s perspective.

In our monthly chart, fig. 3, there might be a possibility for an AB=CD pattern. TEL corrected near the 50% fib level suggesting a target between 127% and 161.8% fib extension. That’s at 3680 and 4190 respectively.

fig. 3, possible AB=CD pattern

When do we buy?

In our weekly chart, there seems to be a symmetrical triangle forming (fig 4). Also, TEL managed to stay above the 78.6% fib retracement level of the swing from July 2006 to July 2007.

fig. 4, Symmetrical Triangle Pattern

We have three buying opportunities:

1. If the price breaks out of that triangle range and managed to stay above that resistance line, then that’s a buy signal for me. You may buy immediately at market price or we wait for a pullback. Keep in mind that we are buying for the long term. We certainly are not in a hurry to buy. Hence, I would prefer buying in at pullback.
2. Another buying opportunity is near 2040, which is the 78.6% retracement of the swing from July 2006 to July 2007
3. If we draw a fib retracement on the dailies, our potential reversal zone is between 1920 and 1990.

Recommendation: Buy

Buy: 1920 / 2040
Stop: 1790
Target: 3680 / 4190
Possible Holding period: 5 years